Mazda to invest $120 mil to build an engine plant in Mexico

Mazda Motor Corp. will make an around $120-million investment in a new engine manufacturing plant in Mexico. The engine plant will be onsite at the carmaker’s vehicle assembly site currently being constructed in Salamanca, Mexico. It will have an output capacity of around 230,000 engines annually, Mazda said in a statement.

Mazda is set to commence vehicle production at the Salamanca site in the first quarter of 2014. Mazda’s Salamanca site will build the Mazda2 and Mazda3 for the United States and markets in Central and South America.

The site will also build engines under its Skyactiv family of technologies. Mazda considers its manufacturing operation in Mexico as a vital part of its global bid to cut its dependence on vehicles exported from Japan and protect itself from fluctuations in value of the Japanese yen.

Around three-quarters of Mazda’s vehicles are currently built in Japan, making the carmaker more export-reliant than other Japanese carmakers like Toyota, Honda and Nissan.

The onsite engine plant will boost Mazda’s manufacturing operation in Mexico by increasing the amount of locally procured parts in the Mazda2 and Mazda3. Mazda aims to sell around 1.7 million vehicles around the world in the fiscal year ending March 2016, expecting 80 percent of them to feature its Skyactiv technology.